Iranian Oil Imports Will Not Be Decreased, China Tells U.S.

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Crude oil prices are catching some lift in the week's early trading, with WTI barrel prices pushing over the 68.75 level as Saudi output begins to slide while U.S. drilling efforts stall out.

USA crude futures lost more than 7 percent in July, their steepest drop in two years, amid signs that a surplus is re-emerging in some parts of the world market.

China's Unipec, the trading arm of Sinopec, has suspended crude oil imports from the US due to the growing trade spat between Washington and Beijing, three sources familiar with the situation said Friday.

Output by top exporter Saudi Arabia has also risen recently, to around 11 million bpd, and USA production is around that level as well.

Spot Brent crude oil futures LCOc1 were trading at $73.68 per barrel at 0205 GMT on Monday, up 47 cents, or 0.6 percent, from their last close.

Outside the United States, top crude exporter Saudi Arabia pumped around 10.29 million barrels per day (bpd) of crude in July, two OPEC sources said on Friday, down about 200,000 bpd from a month earlier.

Chinese and Indian companies "will be subject to the same sanctions that everybody else's are if they engage in those sectors of the economy that are sanctionable", a State Department official told reporters in June.

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Bloomberg said the kingdom's stored crude has been falling for nearly three years and continued to drop as Riyadh cut production last year. Inventories rose for the first time in seven months in May.

Despite the rising prices on Monday, traders said one relief to markets was an announcement by Saudi Arabia at the weekend that oil shipments through the Red Sea shipping lane of Bab al-Mandeb had been resumed.

Whilst exports of crude from the United States to China have grown exponentially in recent years, Leszczynski says the volumes are still pretty small from China's point of view.

Currently China is the world's top buyer of crude oil, including from Iran, making Chinese refusal to cooperate a major challenge to the US.

Tamar Essner, an analyst at Nasdaq Inc., said there are "no signs whatsoever that this trade war is going to clear up anytime soon", and that has "caused investors to continue to trim net length, take profits, and de-risk that position with the sense that oil's upside is limited unless there's material reduction in Iranian barrels".

The strain between China and the USA derive from a similar attack by Trump, who levied a global tariff on steel and aluminum imports in March. "Iran was hoping to sell more than 500,000 [barrels per day] of oil to India in [fiscal year] 2018/2019", the outlet wrote, citing a February statement by Iranian Oil Minister Bijan Zanganeh.

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